Execution Copy
____________________________
Technical Services Agreement
____________________________
by and between
Sohu ITC Information Technology (Beijing) Co. Ltd.
and
Hikari Tsushin, Inc.
28 January 2000
THIS TECHNICAL SERVICES AGREEMENT ('Agreement') is made on this 28th day of
January 2000 in Beijing, People's Republic of China ('PRC')
BY AND BETWEEN
Sohu ITC Information Technology (Beijing) Co. Ltd., with its registered address
at Suite 519, Tower 2, Bright China Chang An Building, 7 Jianguomennei Avenue,
Beijing 100005, PRC ('Party A')
AND
Hikari Tsushin, Inc., with its registered address at 23F Ohtemachi Nomura
Building, 2-1-1 Ohtemachi, Chiyoda-ku, Tokyo 100, Japan ('Party B')
(Individually a 'Party' and collectively the 'Parties').
1. DEFINITIONS
-----------
Unless otherwise stipulated, the following terms mentioned in this
Agreement shall have the meanings set forth below:
'Force Majeure' Those events that are unforeseen, or, if
foreseen, reasonably unavoidable, and that
arise due to the special nature of network
technology and network media, effecting
adversely the normal operation of networks.
Force Majeure includes the result of attacks by
hackers, of technical adjustments made by the
Beijing Telecommunications Administration, the
temporary shutting down of networks due to
government control (with written verification
issued by the relevant authority), in addition
to natural and human-caused disasters.
'Impression' The technical effect that results from a user
viewing an information banner posted on a web
site.
'Information Banner' A message banner or similar type of placard
which is designed and displayed on Sohu's web
site in accordance with this Agreement, and
which is linked to
Party B's designated web address and contains
information relating to Party B or its affiliates.
'Number of Impressions' A figure describing the number of views, within a
given period of time, of Party B's Information
Banners, as provided by the advertisement tracking
statistics report system maintained by Party A.
'Party B's Web Address' The IP address or internal network address owned
by Party B or its affiliates to which a given
Information Banner is linked.
'RMB' Renminbi, the official currency of the PRC.
'Sohu Web Site' A Chinese language web site that operates with the
approval of the post and telecommunications
administrative department of China under the
domain name 'www.sohu.com'.
'USD' United States Dollar, the official currency of the
United States of America.
2. SCOPE OF SERVICES
-----------------
2.1 Party A shall provide to Party B technical services relating to its
promotional activities on the Sohu Web Site in the following areas:
(a) Information Banners;
(b) Sponsorship of channels;
(c) Directories; and
(d) E-commerce platform.
2.2 The technical services provided by Party A to Party B shall include
but not be limited to the design, animation, production and posting of
Information Banners for display on the Sohu Web Site, as well as the
establishment of links between those Information Banners and Party B's
Web Address.
2.3 Party A shall post Party B's Information Banners on the appropriate
pages of the Sohu Web Site, in accordance with Party B's requirements
and the terms set out in this Agreement.
2.4 In providing the services described in Article 2.2 above, Party A
shall, on Party B's request and in accordance with this Agreement,
design and produce the necessary software, install and maintain such
software and provide Party B with related technical consulting.
2.5 Party A must obtain Party B's written acceptance of the design for any
Information Banner produced by Party A before posting it on Sohu's Web
Site. Should Party B provide its own design for an Information
Banner, Party A's written acceptance of such must be obtained before
the Information Banner in question may be posted on Sohu's Web Site.
2.6 The Parties shall negotiate and determine separately details such as
the position of an Information Banner and the minimum Number of
Impressions, all of which shall be recorded in a form such as that
provided in the Appendix hereto.
2.7 If, due to operational requirements, Party A needs to amend the home
page, catalogue pages or channels on the Sohu Web Site, and such
amendment will result in changes to the Number of Impressions, or the
position and size of an Information Banner, then it shall notify Party
B in writing of its intended amendments fifteen (15) days in advance,
specifying the revised Number of Impressions, position and size of the
Information Banner. Party B shall, within ten (10) days of receiving
the aforementioned notice, indicate its approval or disapproval of
such in writing to Party A. If Party B fails to reply to Party A's
notice within the stipulated period, it shall be deemed to have
accepted the changes.
2.8 In addition to the services described in Article 2.2 above, Party A
may, upon Party B's request, assist Party B to collect information
about network users or to conduct market surveys, including collecting
information on potential customers and carrying out online surveys.
The fees for such assistance shall be determined separately by the
Parties.
3. TERM OF SERVICE
---------------
The term of this Agreement shall be three years: 1 January 2000 to 31
December 2002. Any negotiations to extend this Agreement shall be
completed sixty (60) days before its expiry.
4. FEES
----
4.1 As consideration for the services described in Article 2.2 above,
Party B shall pay to Party A total service fees in RMB of an amount
equivalent to USD [*] as set forth in the payment schedule below and
at the median rate of exchange set by the People's Bank of China on
the day of payment. These service fees are to be paid into a RMB
account designated by Party A.
Year Amount
----- --------
(USD)
(1 January 2000 - 31 December 2000) [*]
(1 January 2001 - 31 December 2001) [*]
(1 January 2002 - 31 December 2002) [*]
The Parties agree to negotiate for a possible downward adjustment of
fees in the event Party A fails to meet the minimum Number of
Impressions.
4.2 Party B shall, during the term of this Agreement, pay the RMB
equivalent of USD [*] by wire transfer to a bank account designated by
Party A within five (5) working days following each December 1, March
1, June 1 and September 1; provided, however, that Party A shall
deliver an invoice to Party B requesting payment of such quarterly
amount not less than fifteen (15) business days prior to the date on
which payment is due; and provided further that Party B shall make an
initial quarterly payment of the RMB equivalent of USD [*] within
fifteen (15) days following date of this Agreement. Party A shall
issue to Party B a receipt within five (5) days after receiving each
payment from Party B. If Party B fails to effect payment of any
installment of service fees in accordance with this Article 4.2, a
penalty of 0.05 percent
* REDACTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT.
(0.05%) simple interest per day will be charged on the overdue amount.
4.3 Party A shall offer to Party B fees for the services described under
Articles 2.2 and 2.8 that are [*] to Party A's most preferred
customers.
4.4 Party A shall, during each year of the term of service, provide to
Party B an amount of services corresponding to the fee of RMB
equivalent of USD [*] ('Annual Service Quota'). Party B may, within
the scope of the Annual Service Quota, give instructions to Party A
from time to time requesting Party A to provide services described
under Articles 2.1 to 2.7 above.
4.5 If, during all but the final year of this Agreement, Party B cannot or
does not exhaust the Annual Service Quota for that year, then the
remaining amount may be carried forward to the next year, provided
that such amount does not exceed 10% of the total Annual Service Quota
in question.
4.6 Party B shall use all available amount of each Annual Service Quota
within the term of this Agreement. If any amount of Annual Service
Quota remains unused upon the expiry of this Agreement, then Party B
shall be deemed to have forfeited its right to such, and Party A shall
have no obligation to reimburse Party B for the same.
5. INFORMATION SECURITY AND CONFIDENTIALITY
----------------------------------------
5.1 The ultimate responsibility for the content provided by Party B for
its Information Banners shall rest with Party B, which shall also bear
all corresponding legal liabilities.
5.2 If Party A believes in its sole discretion that the content provided
by Party B for an Information Banner violates PRC law or is otherwise
inappropriate, then it reserves the right to refuse to provide
services for that portion of the content or to request Party B to
revise the Information Banner in question.
5.3 Party A shall not be liable for any disputes, controversies or claims
arising from or in connection with any content provided by Party B.
Party B warrants that it shall indemnify Party A for all actual losses
caused by any such disputes, controversies or claims.
* REDACTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT.
5.4 Party A shall maintain as confidential all information relating to
Party B's business activities with which it is provided by Party B
for purposes of producing Information Banners, where such information
is not already in the public domain. Similarly, Party B shall be
responsible for maintaining as confidential any technical or
commercial information relating to the Sohu Web Site that is not in
the public domain.
5.5 Notwithstanding the provisions of Article 5.4 above, neither Party
shall be deemed to have breached this Agreement if it releases
confidential information pursuant to a written agreement between the
Parties, at the request of a government authority or where it is
legally obliged to do so; provided that the receiving Party takes
reasonable and lawful actions to avoid and/or minimise such
disclosure and provides the other Party with prompt written notice of
such request or requirement so that the other Party may seek a
protective order or other appropriate remedy.
5.6 Party A warrants that the Sohu Web Site will comply with all
applicable laws and regulations and will not infringe third-party
intellectual property rights, and will agree to indemnify Party B
against any direct losses incurred as a consequence of any breach of
this warranty.
6. COPYRIGHT
---------
6.1 Party B owns all rights to the information it provides to Party A and
which is displayed on Sohu's Web Site on its behalf, as well as the
copyright to the Information Banners.
6.2 Party B hereby grants to Party A a non-exclusive, non-transferable,
royalty-free right to use any of Party B's trade marks or logos that
may be displayed in the Information Banners, solely as authorised and
approved by Party B for the purpose of performing Party A's
obligations hereunder. Party A acknowledges that Party B retains all
rights, title and interest in and to such trademarks and logos.
Except as expressly granted in this Agreement, Party A shall have no
rights with respect to such trade marks and logos. Any and all uses
of such trade marks and logos by Party A shall insure to the benefit
of and be on behalf of Party B.
7. RIGHTS AND OBLIGATIONS OF PARTY A
---------------------------------
7.1 Party A shall complete the design, production or posting of an
Information Banner, as described in Article 2.2 above, within thirty
(30) days after receiving all the relevant materials, characters,
graphics and other necessary information from Party B, and according
to a specific schedule for the Information Banner in question to be
determined by both Parties through consultation.
7.2 Party A shall maintain a complimentary advertisement tracking report
system, so as to enable Party B to check free of charge the Number of
Impressions of its Information Banners on a daily, weekly and monthly
basis.
7.3 Party A shall not be liable for any delays associated with the
production and design of any Information Banner due to Party B's
failure to pay Party A's service fees or to provide to Party A all
necessary materials for the production and design of the Information
Banner.
8. RIGHTS AND OBLIGATIONS OF PARTY B
---------------------------------
In accordance with Section 4 above, Party B shall pay to Party A on time
and in full the service fees, and shall use its best efforts to exhaust the
Annual Service Quota.
9. LIABILITIES FOR BREACH OF THIS AGREEMENT
----------------------------------------
9.1 If, at any time during the term of this Agreement, either Party
breaches any material provisions hereof, then the other Party may
request in writing that such breach be rectified. The Party in breach
shall rectify such breach accordingly within fifteen (15) days of
receipt of such written request.
9.2 Where the Party in breach is unable to effect rectification within
fifteen (15) days of receiving the other Party's written request to
do so, then the other Party may terminate this Agreement immediately
and request from the Party in breach compensation for all actual
losses incurred as a result of that breach.
9.3 If the Party not in breach terminates this Agreement pursuant to
Article 9.2 above, the Party in breach shall pay to the Party not in
breach a penalty amount equivalent to the standard quarterly
service fee referred to in Article 4.2 above for the year in
question
10. FORCE MAJEURE
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10.1 If Party A is unable to perform all or part of this Agreement due
to the occurrence of Force Majeure, then Party A shall notify Party
B of such in writing. The performance of those provisions of this
Agreement that are affected shall be suspended during the term and
to the extent of the Force Majeure, including Party B's payment
obligations to Party A.
10.2 If Party B is unable to perform all or part of this Agreement due
to the occurrence of Force Majeure, then Party B shall notify Party
A of such in writing. The performance of those provisions of this
Agreement that are affected shall be suspended during the term and
to the extent of the Force Majeure, including Party A's payment
obligations to Party B.
11. NOTICES
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11.1 Any notices and communications between the Parties shall be made in
writing in the English language and delivered by facsimile, e-mail,
courier (including express courier service) or registered airmail
letter.
11.2 Unless changed by written notice, all notices and communications
shall be sent to the appropriate correspondence addresses set forth
below:
If to Party A:
Responsible Person: Victor Koo
Address: 7 Jianguomennei Avenue
Suite 519, Tower 2
Bright China Chang An Building
Beijing 100005, China
Department: Corporate Development
Telephone: 6510-2160
Facsimile: 6510-2159
E-mail: vkoo@itc.com.cn
If to Party B:
Responsible Person:
Address:
Department:
Telephone:
Facsimile:
E-mail:
11.3 For notices or communications sent by facsimile, the time of
receipt shall be deemed to be the exact time displayed in the
corresponding transmission record, unless such facsimile is sent
after 5:00 PM or on a non-business day in the place of receipt, in
which case the date of receipt shall be deemed to be the following
business day. For those sent by e-mail, the time of receipt shall
be deemed to be as recorded in the e-mail message in question
evidencing the receipt of the relevant message. For those sent by
courier, the time of receipt shall be deemed to be the date that
the receiving party signs for the document; For those sent by
registered airmail, the date of receipt shall be deemed to be seven
(7) days after the recorded date of dispatch.
12. DISPUTE RESOLUTION AND GOVERNING LAW
------------------------------------
12.1 The execution, performance and interpretation of this Agreement as
well as the settlement of any related disputes shall be governed by
the laws of the PRC. If there is no published and publicly
available law in the PRC governing a particular matter relating to
this Agreement, reference shall be made to common international
commercial and/or industrial practice.
12.2 All disputes arising out of or in connection with this Agreement
shall be finally settled in Beijing conducted in the English
language under the Rules of Arbitration of the International
Chamber of Commerce by a panel of three (3) arbitrators appointed
in accordance with the said Rules.
12.3 All arbitration proceedings shall be conducted in English and a
daily transcript of such proceedings shall be prepared in English.
12.4 During arbitration, the Parties shall, to the extent possible,
continue to perform the parts of this Agreement not under
arbitration.
13. MISCELLANEOUS
-------------
13.1 The headings contained herein are inserted for reference purposes
only and shall not affect the meaning interpretation of any part of
this Agreement.
13.2 This Agreement may only be amended by a written instrument signed
by the Parties.
13.3 This Agreement shall be binding on the Parties and their successors
and assignees. Neither Party may assign this Agreement without the
prior written consent of the other Party.
13.4 Failure or delay on the part of either Party to exercise any right,
authority or privilege under this Agreement, or under any other
agreement relating hereto, shall not be deemed as a waiver thereof;
nor shall any single or partial exercise of any right, authority or
privilege preclude any other future exercise thereof.
13.5 A reference to a day herein refers to a calendar day. A reference
to a business day herein refers to a day on which commercial banks
are open for business in the PRC.
13.6 This Agreement and the Appendix constitute the entire agreement
between the Parties and supersede all prior discussions,
negotiations and agreements between them. The Appendix forms an
integral part of this Agreement and has the same legal effect as
this Agreement. If there is any inconsistency between the
provisions of this Agreement and the Appendix, the provisions of
this Agreement shall prevail to the extent of the inconsistency.
13.7 This Agreement is executed in two (2) original versions, in the
English language, one (1) original version shall be retained by
each Party.
This Agreement is hereby concluded by both Parties on the date first set forth
above.
For and on behalf of:
Party A: Sohu ITC Information Technology (Beijing) Co. Ltd.
Signature:
Name: Charles Zhang
Position: Chairman and General Manager
Party B:
Signature:
Name: Masahide Saito
Position: Executive Managing Director